Business reporter for the NZ Herald

Software an easier sales pitch - exec

Harder for firms making physical technology to attract investors, says Sensagrid founder.

Software companies also attracted more media attention than others in the industry, Lowy said. Photo / Getty Images
Software companies also attracted more media attention than others in the industry, Lowy said. Photo / Getty Images

Flavour of the month software firms have an easier time getting investor attention than others in the technology sector, says one start-up executive.

Jonathan Lowy is the founder of a company called Sensagrid, which is in the early stages of commercialising smart-grid technology.

Sensagrid's system monitors the health of the power grid, manages electricity demand and can stabilise large "grid events" within seconds, its website says.

A former engineer at Navman and team leader at Phitek Systems, Lowy said software firms had an "easier sell" to investors than companies developing physical technology. The public could more easily grasp what software developers were doing, he said.

"There is a fear, I think, of companies that do anything that's got a widget in it ... when you make [a] widget, when you make a product, whether it's made in New Zealand or in Asia ... you can't respin it overnight when you've stuffed up or you need an extra feature.

It takes time, and therefore there's a delay in the process ... it makes the process that much more expensive and that much slower, which is quite frightening.

"So it's much harder to invest in a technology company that's doing something beyond software ... [software] is an easier sell for sure because it's the flavour of the month."

Software companies also attracted more media attention than others in the industry, Lowy said.

Last week's Hi-Tech Awards in Auckland was an event Lowy described as a "beauty contest" which was dominated by software firms.

Sensagrid was a finalist in the pre-commercialisation award category, but didn't win.

"I kind of didn't expect to [win] as we made a last-minute decision to apply for it and we pitched it in the wrong way ... but I'm not bothered about that. This wasn't about whether we won or not," he said.

"There were really worthy entrants in our section and the company that won is developing a piece of technology ... doing something with cartoon characters.

"While it might make money it's not really technology, and that seems to apply across the board [at the awards]," he said.

Lowy said the awards gave the impression they're about "newness".

"When really they're not ... they're not celebrating the broad church [of technology] that they claim," he said.

Xero, which makes online accounting software, won an award for company of the year and the prize for exporters in the above-$5 million category. Vend, which develops cloud-based technology for retailers and other businesses, won the under-$5 million exporter award and the innovative service product award.

Although software developer Xero won the top prize on the night, said Hi-Tech Awards spokesman Bob Pinchin, there was a range of companies included as finalists.

"In that export category you had ARANZ Geo, Buckley Systems, Compac Sorting Equipment and Xero, four quite different companies and, of those, only one is a software company," Pinchin said.

"And if you look at some of the other categories there is a spread across the technology industry."

- NZ Herald

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